Highlights in today’s morning note
Source: National Crop Estimate Committee and Agbiz Research
Although this season started off on an optimistic note, the picture of South Africa’s maize crop conditions is now somewhat mixed. The eastern regions of the country which predominately produce yellow maize are generally in good condition, with a fair amount of soil moisture. Meanwhile, the western regions of the country which largely produce white maize were unable to meet their planting intentions due to persistent dry and warm weather conditions. Additionally, the crop in areas that managed to plant is experiencing heat stress.
A crop assessment released by Grain SA yesterday confirmed last week’s estimates, which pointed out that farmers in the North West province had planted roughly 70% of the intended area of 580 000 hectares. Meanwhile, the north-western parts of the Free State province had planted about 75% of their intentions.
The optimal planting window for maize has already passed, so we don’t expect any additional planting activity, even if South Africa was to suddenly receive high rainfall. In such an event, farmers would instead shift to sunflower seed which is still in the optimal planting window but closing this weekend.
At the beginning of the season, farmers intended to plant 2.47 million hectares of maize, down by 6% from the 2016/17 production season. About 57% was set to be white maize, with 43% being yellow maize. We will get an update about this on 30 January 2018 when the CEC releases its preliminary estimates.
With the winter wheat harvest nearing its end across South Africa, the weather is becoming of less importance in this market for now. The areas that are still harvesting is the VKB and OVK regions in the eastern Free State province. The yields received thus far in both regions are well below average due to unfavourable weather conditions earlier in the season.
As highlighted in our previous notes, the Western Cape province had a similar experience of below average yields, but at a much bigger scale. The impact of lower harvest in these particular provinces is clear from the national production estimate which currently stands at 1.48 million tonnes, down by 23% from 2016 harvest. An update of these estimates will be released on the month end, but we don’t foresee major changes.
Above all, the wheat volumes recently delivered to commercial silos are well below the previous week. This shows that the harvest process is towards completion. About 17 717 tonnes of wheat were delivered in the week ending 15 January 2018, down by 13% from the volume delivered the previous week. This placed South Africa’s wheat producer deliveries for “week 1 to 15” of the 2017/18 marketing year at 1.34 million tonnes.
The western Free State region has nothing to celebrate as Tuesday’s rainfall was very light and scattered, varying between 03 and 11 millimetres. The main towns that received these drops were Bloemfontein, Bothaville, Bultfontein, Hoopstad, Losdoorns, Welkom and Wesselsbron.
This dryness has led to lower soil moisture, which subsequently slowed activity in the sunflower seed fields. Similarly to last week’s assessment, the most recent survey from Grain SA shows that farmers have thus far planted roughly 40% of their intentions in the North West province. In the north-western parts of the Free State province, the progress is much slower, with roughly 20% of the intended area planted so far.
As highlighted in yesterday’s note, the optimal planting window is closing this weekend, 20 January 2018. This implies that if South Africa does not receive good rainfall within the next few days, the intended area of 665 500 hectares for sunflower seed might not be fully utilised. The National Crop estimate Committee will offer a detailed view on hectares planted on 30 January 2018.
While disappointed in the past few weeks, the weather forecasts continue to paint a constructive picture of possible rainfall of between 16 and 90 millimetres of rainfall across the sunflower seed growing regions within the next eight days. This will be a welcome development as provinces such as the North West last received meaningful rainfall in the first week of December 2017.
Yesterday the South African potatoes market pulled back from levels seen the previous day and settled lower due to the relatively large stock of 685 231 pockets (10kg bag) at the beginning of the trading session. The price was down by 4% from the previous day, closing at R38.81 per pocket (10kg).
Moreover, during the session, the market saw an uptick in deliveries due to ongoing harvest activity. This led to a 12% increase in daily stocks to 767 187 pockets (10kg bag).
The fruit market remains quite volatile. After good gains at the start of the week, yesterday the prices of bananas and oranges declined by 6% and 41% from the previous day, closing at R6.13 per kilogram and R4.50 per kilogram, respectively, due to selling pressure. However, this bearish sentiment could be short-lived owing to lower stocks of 191 000 tonnes of bananas and 25 000 tonnes of oranges.
Meanwhile, the price of apples was up by 15% from the previous day, closing at R859 per kilogram due to strong commercial buying interest.
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